The Public Policy Doctrine Is An Unlikely Solution To Addressing Racism In Greek Organizations

Sigma Alpha Epsilon’s problems seem to be getting bigger by the second. Most recently, an investigation into the events has discovered that the racist chant the chapter at the University of Oklahoma was caught singing was allegedly taught to some members during a national leadership cruise. Sigma Alpha Epsilon National Headquarters has acknowledged this, yet maintains that racism is not a part of the fraternity’s culture and is committed to eradicating it within its ranks. Upon seeing the racist chant, SAE’s national headquarters has revoked the University of Oklahoma chapter’s charter, set up an anonymous hotline by which members may report allegations of racist activity, and created a diversity chair.

In the fallout of SAE’s mea culpa, college social fraternities have come under a great deal of scrutiny. Some have even called for “racist fraternities” to lose tax-exempt status. To be sure, there is precedent for revoking tax-exempt status from an entity for having a policy of discrimination. In Bob Jones University v. United State, the Supreme Court upheld the IRS’s decision to revoke Bob Jones University’s tax-exempt status for having a policy that was hostile to romantic interracial relationships. The Court stated  “[i]t would be wholly incompatible with the concepts underlying tax exemption to grant tax-exempt status to racially discriminatory private educational entities. . . . Racially discriminatory educational institutions cannot be viewed as conferring a public benefit within the above ‘charitable’ concept or within the congressional intent underlying 501(c)(3).”

The Court’s ruling in Bob Jones University is clear: racial discrimination is against public policy and is permissible grounds for the IRS to revoke an organization’s tax-exempt status. However, what is unclear is how Bob Jones University is applicable to the fraternities in question. In Bob Jones University, the school had an explicit policy of discrimination; such is not the case for fraternities today. In fact, one may have a difficult time finding a fraternity with a policy of discriminating on the basis of race, or some other immutable trait recognized under federal law. Many fraternities, like SAE, have a very clear and comprehensive anti-discrimination policy. Any instance of racism in one of the numerous autonomous chapters would be sharply rebuked, and said to have been an isolated incident by its national headquarters.

One might say fraternities at the national level are becoming more progressive. A more cynical view might be that these fraternities have competent counsel familiar with Bob Jones University. In any event the Public Policy Doctrine may be pushed to its limit in these instances. Without demonstrating that a fraternity has an actual discriminatory policy, it is, at best, unclear whether a fraternity could have its tax-exempt status revoked based on the actions of one of its autonomous chapters.

Might there be a more effective approach under federal law in dealing with the problem of racism in fraternities?  See, A. Brennen, Tax Expenditures Social Justice, and Civil Rights: Expanding the Scope of Civil Rights Laws to Apply to Tax-Exempt Charities, 2001 B.Y.U.L. Rev. 167.

DAB